German Recession Forecast as DIW Sees Contraction This Quarter

(Bloomberg) --

The German economy probably shrank again this quarter, tipping it into recession amid a deepening slump in manufacturing, according to the DIW institute.

It forecasts a 0.2% fall in output in the three months through September after a decline of 0.1% in the previous quarter. A monthly DIW gauge of activity was unchanged at 89 points in September, pointing to another contraction.

Germany’s Federal Statistics Office is due to publish preliminary data on third-quarter GDP on Nov. 14. The median forecast of economists in a Bloomberg survey this month is for the economy to stagnate in the period.

Read More:

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• Why Germany May Need to Fight Recession With Spending: QuickTake
• Glum Germans Join Lower End of Bloomberg’s Trade Tracker

Key points from DIW report published Thursday:

• Although business sentiment has deteriorated, industry orders have stabilized
• Manufacturing output will nonetheless shrink in the third quarter
• Services, by contrast, are making a positive contribution to growth
• Consumer services companies profiting from increasing household purchasing power
• Employment growth has clearly slowed but wages have markedly increased
• Disposable income -- and private consumption -- boosted by fiscal measures

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